Preparation of SCE in A Single Proprietorship: Expectations

Learning Module for Accountancy, Business and Management
Preparation of SCE in a
LESSON
4 single proprietorship
EXPECTATIONS
You will represent real-life situations using statement of changes in equity

Specifically, this module will help you:

prepare astatement of changes in equity for a single proprietorship
business.
PRETEST
Directions: Draw sign if the account increases owner’s equity, sign if it

decreases owner’s equity account and sign If no effect in a yellow paper.
Let us start your

journey in learning more on
SCE I am sure you are ready
and excited to answer the
Pretest. Enjoy answering!
1. Initial investment 11. Professional Fees

2. Rent expense 12. Transportation Expense
3. Service revenue 13. Rental Revenue
4. Capital 14. Payment of Liability
5. Drawing 15. Supplies
6. Salaries 16. Equipment
7. Additional investment 17. Depreciation Expense
8. Cost of Goods Sold 18. Land
9. Accounts Payable 19. Prepaid Expenses
10. Allowance for Bad Debts 20. Withdrawals
Great, you finished answering the

questions. You may request your
facilitator to check your work.
Congratulations and keep on
learning!
3
LOOKING BACK TO YOUR LESSON
Directions: Match column A with Column B. Write letters only.

Column A Column B
1. Also called a trading business
A. Purchase Discount
2. It is the stock at the beginning
B. Inventory Beginning
3. A contra purchase account
C. Merchandising business
4. Sales less cost of sales
D. Freight In
5. Beginning inventory plus net cost
E. Sales Discount
of purchases
F. Net Sales
6. Transportation paid by the
G. Cost of Sales
company to their suppliers
H. Net Cost of Purchases
7. Sales less contra sales account
I. Cost of goods available for sale
8. Cost of goods available for
J. Gross Profit
sale less ending inventory
9. Net purchases plus freight in
10. A contra sales account
BRIEF INTRODUCTION
The statement of changes in equity shows the movement of equity

account during the period. Whether it increases or decreases at the end of the
accounting period. In this module you have to recall what increases and
decreases owner’s equity account.
Increases owner’s equity account are: Decreases owner’s equity account are:
a. Additional investment a. Drawing
b. Profit b. Loss
Forms of Business and their owner’s as presented in the equity account

Forms of Business Owner/s
1. Single Proprietorship Proprietor
2. Partnership Partners
3. Corporation Shareholders
4. Cooperative Members
4
The objective of this module is to prepare the statement of changes in equity

of a single proprietorship business.
Parts of Statement of Changes in Owner’s Equity
a. Heading
b. Increases to Equity
i. Net income for the year
ii. Additional investment
c. Decreases to Equity
i. Net loss for the year
ii. Withdrawals by the owner
Format of SCE if the business has a net income
STEP MIN TUTORIAL SERVICES

STATEMENT OF CHANGES IN OWNER’S EQUITY
For the year ended December 31, 2019 HEADING
Capital, January 31, 2019 P 100,000 INCREASES

Additional Investment P50,000 EQUITY
Add: Net Income 25,000 75,000
Total P175,000
Less: Drawing 25,000 DECREASES
EQUITY
Capital, December 31, 2019 P150,000
========
Shown above is an example of SCE with a positive result of operation.

The net income is added to additional investment and the effect, it
increases equity account.
5
Format of SCE if the business resulted to a net loss
STEP MIN TUTORIAL SERVICES

STATEMENT OF CHANGES IN OWNER’S EQUITY HEADING
For the year ended December 31, 2019
Capital, January 31, 2019 P 100,000 INCREASES

EQUITY
Additional Investment 50,000
Total P 150,000
Less: Drawing P25,000 DECREASES
Net Loss 25,000 50.000 EQUITY
Capital, December 31, 2019 P100,000
Shown above is an example of SCE with a negative result of

operation. The net loss is added to drawing account and the effect, it
decreases the owner’s equity account.
ACTIVITIES
Activity 1.
Directions: Write the Correct answer on the space provided before the number.
_________ 1. A business organization owned by only one owner.
_________ 2. Two or more persons combine their property and industry
_________ 3. Has a legal entity entered by the operation of law.
_________ 4. Includes company name, the statement of equity and the date
_________ 5. The first investment made by the business.
_________ 6. Decreases the equity account because the business withdrew cash
_________ 7. The owner of a single proprietorship business.
__________8. The owners of a partnership business.
__________9. The term for the owner of a corporation.
_________10. Formed in accordance with a cooperative code of the Philippine
6
Activity 2.
Directions: Write True if the statement is correct and False if the statement is
incorrect.
____________1. Revenue increases owner’s equity account
____________2. Expenses decrease owner’s equity account
____________3. Liability decreases owner’s equity account
____________4. Additional investment decreases owner’s equity account
____________5. Losses decrease owner’s equity account\
____________6. Beginning capital is capital at the beginning of the period
____________7. Net loss is added to drawing account before it is deducted to the
capital beginning and additional investment.
____________8. The normal balance of Revenue is credit
____________9. The normal balance of Expenses is debit
___________10. The income amount in the statement of changes in owner’s
equity is the same amount as the income from the SCI for the same period.
Activity 3.
Directions: Compute for the statement of Changes in Equity. For you to answer the
unknown correctly, try to recall what increases and decreases owner’s equity
account.
Capital Additional Capital

Beginning Investment Drawings Profit Ending
1 50,000.00 25,000.00 7,000.00 85,000.00 1
2 35,000.00 75,000.00 2 (20,000.00) 77,500.00
3 80,000.00 20,000.00 10,000.00 3 105,000.00
4 250,000.00 4 75,000.00 200,000.00 425,000.00
5 5 38,000.00 120,000.00 250,000.00 263,000.00
7
REMEMBER
The statement of changes in equity shows the movements in

owner’s equity during the period.
The following accounts affect owner’s equity :
(a) Additional investment by the owner (increase);
(b) Drawings by the owner (decrease);
(c) Profit (increase); and
(d) Loss (decrease)
CHECK YOUR UNDERSTANDING
Directions: Solve for the unknown item by recalling what increases and decreases
owner’s account.
1
Capital
Beginning Php90,000 Php265,000 Php530,000 Php288,800
Additional 2
Investment Php150,000 Php120,000 Php180,000 Php100,000
3
Drawings Php138,000 Php50,000 Php75,000. *Php85,000
4
Profit Php120,000 (Php200,000) Php250,000 Php150,000
Capita+ 5
Ending Php217,000 (Php85,000) Php555,000 Php385,000.
POSTTEST
Directions: Prepare a statement of changes in equity. Use your family name

as the company name for the heading.
Date Dec 31, 2019 Date March 31,2020
Initial Investment Php268,000.00 Php150,000.00
Additional Investment Php125,000.00 Php150,000.00
Owner’s Drawing Php75,000.00 Php80,000.00
Net Profit/(Net Loss) Php200,000.00 (Php130,000.00)
8
REFLECTIVE LEARNING SHEET
Tito, a 51 year old entrepreneur has

operated his TMAM Transport (Tito Martinez
& Atienza Marie) for over three years now.
On normal days, his grab car earns P2,500
a day. On March 17, however, the
government imposed on enhance community
quarantine or lockdown in Luzon. Only
ECQ private establishments providing basic
necessities were allowed to remain in
business during the quarantine period. Tito
had no income since then up to May 31,
2020.
Tito’s equity decreases, because

transportation was not allowed during the
lockdown. There were some businesses that increase
their equity during pandemic. I want you to write
about what are ways and means to increase owner’s
equity account in your real life situation.
_________________________________________________________________________
_________________________________________________________________________
________________________________________________________________________
_______________________________________________________________________
9
Name: _________________Grade Level: ____Section: _____Score:_______
Teacher:____________________School:______________________________
Worksheet Week 4
Objective: To be able to acquire the knowledge in the preparation of

Statement of Changes in Equity
Learning Content: To be able to prepare the statement of changes in equity for

the net income and net loss.
Directions: Prepare the Statement of changes in equity with the accounts

given below using your surname as your company name for the period ended
December 31, 2019
Capital beginning Php150,000.00

Additional Investment Php50,000.00
Drawings Php78,000.00
Net Profit Php120,000.00
Capital beginning Php75,000.00

Additional Investment Php25,000.00
Drawings Php15,000.00
(Net Loss) Php20,000.00)
11

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Learning Module for Accountancy, Business and Management

You will represent real-life situations using statement of changes in equity

Directions: Draw sign if the account increases owner’s equity, sign if it

Let us start your

1. Initial investment 11. Professional Fees

Great, you finished answering the

LOOKING BACK TO YOUR LESSON

Directions: Match column A with Column B. Write letters only.

The statement of changes in equity shows the movement of equity

Forms of Business and their owner’s as presented in the equity account

The objective of this module is to prepare the statement of changes in equity

Parts of Statement of Changes in Owner’s Equity

Format of SCE if the business has a net income

STEP MIN TUTORIAL SERVICES

Capital, January 31, 2019 P 100,000 INCREASES

Shown above is an example of SCE with a positive result of operation.

Format of SCE if the business resulted to a net loss

STEP MIN TUTORIAL SERVICES

Capital, January 31, 2019 P 100,000 INCREASES

Shown above is an example of SCE with a negative result of

Capital Additional Capital

1 50,000.00 25,000.00 7,000.00 85,000.00 1

2 35,000.00 75,000.00 2 (20,000.00) 77,500.00

3 80,000.00 20,000.00 10,000.00 3 105,000.00

4 250,000.00 4 75,000.00 200,000.00 425,000.00

5 5 38,000.00 120,000.00 250,000.00 263,000.00

The statement of changes in equity shows the movements in

CHECK YOUR UNDERSTANDING

Directions: Prepare a statement of changes in equity. Use your family name

REFLECTIVE LEARNING SHEET

Tito, a 51 year old entrepreneur has

Tito’s equity decreases, because

Name: _________________Grade Level: ____Section: _____Score:_______

Objective: To be able to acquire the knowledge in the preparation of

Learning Content: To be able to prepare the statement of changes in equity for

Directions: Prepare the Statement of changes in equity with the accounts

Capital beginning Php150,000.00

Capital beginning Php75,000.00

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Name: _______________Grade Level: Section: _Score:_____